The smart apartment market is booming. More property managers than ever before are realizing the benefits that IoT can bring to a community. With vacancy rates in the US at all-time lows and rent rates at all-time highs, property managers need to find additional revenue streams without increasing rents, while streamlining operations.
According to the latest smart apartment report from Omdia, in 2021 there were an estimated 1.6 million smart apartment units in the US, representing approximately 6.6% of the multifamily apartment building stock. In 2026, the number of smart apartment units is expected to reach nearly 10 million, equating to 34% of the apartment building stock. In terms of in-unit IoT devices in the US, there were approximately 4 million new devices installed (shipped) in smart apartments in 2021, increasing to approximately 18 million devices in 2026.
Historically, property managers focused on operational efficiencies, which typically included door locks and thermostats, while adding a few IoT devices to each unit to warrant a bump-up in rent.
To improve net operating income (NOI), property managers need to look beyond in-unit IoT and focus on monetizing amenities. This could include charging to reserve space such as a roof-top patio, workspace, or pool area. In-unit amenities could include dog walkers, laundry services, or food delivery, and—for the wider community—managed Wi-Fi. As the Federal Communications Commission in the US clamps down on exclusive partnerships among cable companies and property managers, finding a new revenue stream to support the expense of outfitting a property with updated internet services will be crucial, which is why managed Wi-Fi could be the answer. Managed Wi-Fi allows a property manager to own the infrastructure and set pricing for internet services for the community, allowing them to recapture the high cost more quickly than through leasing deals with cable companies.
In short, community-wide access control solutions combined with energy management are table stakes for smart apartments. The next step involves managed services and combining those services in a single app. Moreover, depending on the region/market, property managers will not have a lot of capital available to spend on in-unit IoT and other features. This means the property manager will need to seek additional revenue streams to recapture those costs. Managed Wi-Fi will be the primary source of additional income for properties, leading to a more robust NOI. For in-unit amenities, water leak detection, smart lighting, smart thermostats, and smart appliances will be the next granite counter tops. For enterprise apartment platforms to be successful in the coming years, a complete offering that combines a property manager software (PMS) approach and integration with IoT and community wide access management will be critical.
Blake Kozak, Senior Principal Analyst, Smart Home